I understand this is not a requirement, but I have never received a damaged unit from an inherited tenant or any legal issues.

I think your goal of getting your first RE investment for around $50k is doable as long as you plan to leverage debt (Loan). 

To defer all of your gain, you'll want to trade up in value, replace all the debt (meaning new properties have at least $350,700 of debt), and not take any cash from the exchange (this is boot which = taxable gain).As for replacement property, it just has to be real property - meaning it can be commercial, STR, land, etc!

Terms such as interest rates and payment schedules are typically negotiable.Combining creative financing with seller financing can include strategies like:Subject-to and Seller Financing: Taking over the seller's mortgage and financing the equity portion through the seller.Lease Option: Renting with an option to buy while negotiating seller financing for part of the purchase.Wraparound Mortgage: Keeping the seller's existing loan while they finance a new loan that includes the balance.To proceed, consider connecting with experienced investors, understanding local legal implications, and attending networking events to gather insights.

The Heloc can also pose as a debt obstacle since its an open end mortgage a.k.a credit card.a mortgage is also set up over 30 years so it offers a lower rate and payment. 

Any legal issues I should be aware of in this situation? 

Signing the lease demonstrates they agree to the terms and then you can hold them accountable.If you don't do this, then the person named on the lease and paying the rent could disappear and you would have no legal authority to charge the remaining three for unpaid rent.

We already paid them a pretty sizeable entry fee ($30k) to cover some of their equity and debt in another project.

It's basically a legal 2-unit that can cashflow $900/month.

Quote from @Collin Hays: From a macro standpoint, cash flow is difficult when servicing debt, at least in the early years.